Singapore Telecommunications Ltd (SingTel) posted a fourth consecutive fall in quarterly profit on Monday, hurt by weakness in Singapore and India, but it reiterated a forecast for low single-digit annual revenue growth in the city-state and stable dividends from its associate firms.
SingTel, Southeast Asia’s largest telecom firm, reported a net profit of S$902 million for the quarter ended December, down 9.6 per cent from S$998 million a year ago.
The result lagged the average forecast of S$922 million by four analysts surveyed by Reuters. SingTel has now reported four straight quarters of year-on-year profit decline.
“It has been a while since SingTel results beat market expectations and some of the operational KPIs in the 3Q result suggest rising competitive pressures, hence we think the share price will likely remain weak,” said Sachin Gupta, Nomura’s Singapore-based Asian telecom analyst.
SingTel’s underlying net profit was S$895 million, 7.6 per cent below the S$968 million posted a year ago.
In Singapore, revenue rose 3 per cent to S$1.68 billion, but EBITDA fell 7 per cent to S$547 million due to higher mobile acquisition and retention costs. SingTel, like most mobile operators, subsidises the cost of handsets such as the iPhone to get customers.
“The strong gain in mobile customers in Singapore during the quarter led to higher acquisition and retention costs, while contributions from the regional mobile associates declined due to their weaker currencies and 3G losses from Bharti India,” SingTel said in a statement.
SingTel’s earnings have been on a downtrend due to weaker performances by its once fast-growing mobile phone associates, in particular Bharti Airtel Ltd, which last week reported a 22 per cent drop in net profit for the three months to December.
Bharti, which ventured into Africa in 2010 by acquiring most of the African operations of Kuwait’s Zain, has been struggling to turn around the African businesses. Its weaker-than-expected performance the last quarter was, however, due to fierce competition in the Indian market.
SingTel saw stronger contributions from Telkomsel in Indonesia and AIS ADVA.BK in Thailand, but its Philippine associate Globe Telecom reported lower earnings.
SingTel’s Australian unit, Optus, grew operating revenue by 2 per cent to A$2.42 billion while net profit for the quarter rose 4 per cent to A$177 million.
SingTel reiterated guidance for low single-digit growth in operating revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) in Australia.
Shares in SingTel, which is 55 per cent owned by Singapore state investor Temasek Holdings, have fallen by about 1 per cent so far this year, underperforming a 12 per cent rise in broader Singapore market.
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